diff --git a/docs/explanation/tools.md b/docs/explanation/tools.md
index 1aa8085..2aa6bf7 100644
--- a/docs/explanation/tools.md
+++ b/docs/explanation/tools.md
@@ -81,10 +81,20 @@ Tools for discovering and working with Panel components.
 
 **Parameters**:
 - `url` (string): The url to take the screenshot of. Default is 'http://localhost:5006/'
+- `width` (int): The width of the browser viewport. Default is 1920
+- `height` (int): The height of the browser viewport. Default is 1200
+- `full_page` (bool): Whether to capture the full scrollable page. Default is False
+- `delay` (int): Seconds to wait after page load before taking the screenshot. Default is 2
+- `save_screenshot` (bool | string): Whether and where to save the screenshot to disk. Default is True
+  - `True`: Save to default screenshots directory (`~/.holoviz-mcp/screenshots/`) with auto-generated filename
+  - `False`: Don't save screenshot to disk (only return to AI)
+  - `string`: Save to specified absolute path (raises ValueError if path is not absolute)
 
-**Use Case**: Understand how the app looks
+**Use Case**: Understand how the app looks and save screenshots for later review
 
-**Returns**: ImageContent.
+**Returns**: ImageContent (screenshot image returned to AI).
+
+**Note**: When `save_screenshot=True` or a path is provided, the screenshot is also saved to disk with a timestamp-based filename (e.g., `screenshot_2026-02-09_12-01-03_abc123.png`).
 
 **Example Query**: *"Take a screenshot of http://127.0.0.1:8000/"**
 
diff --git a/src/holoviz_mcp/config/models.py b/src/holoviz_mcp/config/models.py
index 205f477..11d5a29 100644
--- a/src/holoviz_mcp/config/models.py
+++ b/src/holoviz_mcp/config/models.py
@@ -149,6 +149,9 @@ class ServerConfig(BaseModel):
     vector_db_path: Path = Field(
         default_factory=lambda: (_holoviz_mcp_user_dir() / "vector_db" / "chroma").expanduser(), description="Path to the Chroma vector database."
     )
+    screenshots_dir: Path = Field(
+        default_factory=lambda: (_holoviz_mcp_user_dir() / "screenshots").expanduser(), description="Directory for saving screenshots from panel_take_screenshot tool."
+    )
 
 
 class DisplayConfig(BaseModel):
diff --git a/src/holoviz_mcp/panel_mcp/server.py b/src/holoviz_mcp/panel_mcp/server.py
index fad2ec5..625ec74 100644
--- a/src/holoviz_mcp/panel_mcp/server.py
+++ b/src/holoviz_mcp/panel_mcp/server.py
@@ -12,7 +12,10 @@
 import atexit
 import logging
 from asyncio import sleep
+from datetime import datetime
 from importlib.metadata import distributions
+from pathlib import Path
+from uuid import uuid4
 
 from fastmcp import Context
 from fastmcp import FastMCP
@@ -499,7 +502,14 @@ def _get_playwright_manager() -> PlaywrightManager:
 
 
 @mcp.tool()
-async def take_screenshot(url: str = "http://localhost:5006/", width: int = 1920, height: int = 1200, full_page: bool = False, delay: int = 2) -> ImageContent:
+async def take_screenshot(
+    url: str = "http://localhost:5006/",
+    width: int = 1920,
+    height: int = 1200,
+    full_page: bool = False,
+    delay: int = 2,
+    save_screenshot: bool | str = False,
+) -> ImageContent:
     """
     Take a screenshot of the specified url.
 
@@ -515,6 +525,11 @@ async def take_screenshot(url: str = "http://localhost:5006/", width: int = 1920
         Whether to capture the full scrollable page.
     delay : int, default=2
         Seconds to wait after page load before taking the screenshot, to allow dynamic content to render.
+    save_screenshot : bool | str, default=False
+        Whether and where to save the screenshot to disk:
+        - True: Save to default screenshots directory (~/.holoviz-mcp/screenshots/) with auto-generated filename
+        - False: Don't save screenshot to disk (only return to AI)
+        - str: Save to specified absolute path (raises ValueError if path is not absolute)
     """
     manager = _get_playwright_manager()
     browser = await manager.get_browser()
@@ -529,6 +544,35 @@ async def take_screenshot(url: str = "http://localhost:5006/", width: int = 1920
     finally:
         await page.close()
 
+    # Coerce string "false"/"true" to bool (MCP clients may serialize bools as strings)
+    if isinstance(save_screenshot, str) and save_screenshot.lower() in ("true", "false"):
+        save_screenshot = save_screenshot.lower() == "true"
+
+    # Handle screenshot saving
+    if save_screenshot:
+        if isinstance(save_screenshot, str):
+            # Custom path specified
+            save_path = Path(save_screenshot)
+            if not save_path.is_absolute():
+                raise ValueError(f"save_screenshot path must be absolute, got: {save_screenshot}")
+        else:
+            # Default path - use screenshots_dir from config
+            screenshots_dir = _config.server.screenshots_dir
+            screenshots_dir.mkdir(parents=True, exist_ok=True)
+
+            # Generate filename with timestamp and UUID
+            timestamp = datetime.now().strftime("%Y-%m-%d_%H-%M-%S")
+            unique_id = str(uuid4())[:8]
+            filename = f"screenshot_{timestamp}_{unique_id}.png"
+            save_path = screenshots_dir / filename
+
+        # Ensure parent directory exists
+        save_path.parent.mkdir(parents=True, exist_ok=True)
+
+        # Write the screenshot to disk
+        save_path.write_bytes(buffer)
+        logger.info(f"Screenshot saved to: {save_path}")
+
     image = Image(data=buffer, format="png")
     return image.to_image_content()
 
diff --git a/tests/test_panel_mcp.py b/tests/test_panel_mcp.py
index 4f5d500..412ffe3 100644
--- a/tests/test_panel_mcp.py
+++ b/tests/test_panel_mcp.py
@@ -339,3 +339,144 @@ async def test_take_screenshot_returns_image(self):
         image_content = result.content[0]
 
         assert isinstance(image_content, ImageContent)
+
+    @pytest.mark.asyncio
+    async def test_take_screenshot_saves_to_default_location(self):
+        """Test that take_screenshot saves to default location when save_screenshot=True."""
+        import tempfile
+        from pathlib import Path
+
+        playwright = pytest.importorskip("playwright.async_api")
+
+        # Skip cleanly if the browser binary is not available
+        async with playwright.async_playwright() as p:
+            try:
+                browser = await p.chromium.launch(headless=True)
+                await browser.close()
+            except Exception as exc:  # pragma: no cover - defensive skip
+                pytest.skip(f"Playwright chromium not available: {exc}")
+
+        # Use a temporary directory for this test
+        with tempfile.TemporaryDirectory() as tmpdir:
+            from holoviz_mcp.config.loader import get_config
+
+            config = get_config()
+            original_screenshots_dir = config.server.screenshots_dir
+            config.server.screenshots_dir = Path(tmpdir) / "screenshots"
+
+            try:
+                client = Client(mcp)
+                async with client:
+                    url = "data:text/html,<html><body><h1>Screenshot</h1></body></html>"
+                    result = await client.call_tool("take_screenshot", {"url": url, "save_screenshot": True})
+
+                # Verify image was returned
+                image_content = result.content[0]
+                assert isinstance(image_content, ImageContent)
+
+                # Verify file was saved
+                screenshots_dir = Path(tmpdir) / "screenshots"
+                assert screenshots_dir.exists()
+                saved_files = list(screenshots_dir.glob("screenshot_*.png"))
+                assert len(saved_files) == 1
+                assert saved_files[0].stat().st_size > 0
+            finally:
+                config.server.screenshots_dir = original_screenshots_dir
+
+    @pytest.mark.asyncio
+    async def test_take_screenshot_no_save_when_false(self):
+        """Test that take_screenshot doesn't save when save_screenshot=False."""
+        import tempfile
+        from pathlib import Path
+
+        playwright = pytest.importorskip("playwright.async_api")
+
+        # Skip cleanly if the browser binary is not available
+        async with playwright.async_playwright() as p:
+            try:
+                browser = await p.chromium.launch(headless=True)
+                await browser.close()
+            except Exception as exc:  # pragma: no cover - defensive skip
+                pytest.skip(f"Playwright chromium not available: {exc}")
+
+        # Use a temporary directory for this test
+        with tempfile.TemporaryDirectory() as tmpdir:
+            from holoviz_mcp.config.loader import get_config
+
+            config = get_config()
+            original_screenshots_dir = config.server.screenshots_dir
+            config.server.screenshots_dir = Path(tmpdir) / "screenshots"
+
+            try:
+                client = Client(mcp)
+                async with client:
+                    url = "data:text/html,<html><body><h1>Screenshot</h1></body></html>"
+                    result = await client.call_tool("take_screenshot", {"url": url, "save_screenshot": False})
+
+                # Verify image was returned
+                image_content = result.content[0]
+                assert isinstance(image_content, ImageContent)
+
+                # Verify no file was saved
+                screenshots_dir = Path(tmpdir) / "screenshots"
+                if screenshots_dir.exists():
+                    saved_files = list(screenshots_dir.glob("screenshot_*.png"))
+                    assert len(saved_files) == 0
+            finally:
+                config.server.screenshots_dir = original_screenshots_dir
+
+    @pytest.mark.asyncio
+    async def test_take_screenshot_saves_to_custom_path(self):
+        """Test that take_screenshot saves to custom absolute path."""
+        import tempfile
+        from pathlib import Path
+
+        playwright = pytest.importorskip("playwright.async_api")
+
+        # Skip cleanly if the browser binary is not available
+        async with playwright.async_playwright() as p:
+            try:
+                browser = await p.chromium.launch(headless=True)
+                await browser.close()
+            except Exception as exc:  # pragma: no cover - defensive skip
+                pytest.skip(f"Playwright chromium not available: {exc}")
+
+        # Use a temporary directory for this test
+        with tempfile.TemporaryDirectory() as tmpdir:
+            custom_path = str(Path(tmpdir) / "custom_screenshot.png")
+
+            client = Client(mcp)
+            async with client:
+                url = "data:text/html,<html><body><h1>Screenshot</h1></body></html>"
+                result = await client.call_tool("take_screenshot", {"url": url, "save_screenshot": custom_path})
+
+            # Verify image was returned
+            image_content = result.content[0]
+            assert isinstance(image_content, ImageContent)
+
+            # Verify file was saved to custom path
+            assert Path(custom_path).exists()
+            assert Path(custom_path).stat().st_size > 0
+
+    @pytest.mark.asyncio
+    async def test_take_screenshot_rejects_relative_path(self):
+        """Test that take_screenshot raises ValueError for relative paths."""
+        playwright = pytest.importorskip("playwright.async_api")
+
+        # Skip cleanly if the browser binary is not available
+        async with playwright.async_playwright() as p:
+            try:
+                browser = await p.chromium.launch(headless=True)
+                await browser.close()
+            except Exception as exc:  # pragma: no cover - defensive skip
+                pytest.skip(f"Playwright chromium not available: {exc}")
+
+        client = Client(mcp)
+        async with client:
+            url = "data:text/html,<html><body><h1>Screenshot</h1></body></html>"
+            # Should raise ValueError for relative path
+            with pytest.raises(Exception) as exc_info:
+                await client.call_tool("take_screenshot", {"url": url, "save_screenshot": "./relative.png"})
+
+            # The exception should mention that path must be absolute
+            assert "absolute" in str(exc_info.value).lower()